Selling on the Amazon Marketplace: What it Offers, How it Works & More

The Amazon marketplace is an ecommerce platform that lets anyone, individual sellers and large businesses alike, sell products on Amazon.com. Amazon provides a ready-made website that attracts tens of millions of shoppers daily, and in turn, sellers deliver an Amazon-quality buying experience to shoppers. You can too if you’re prepared to meet Amazon’s exacting standards.

One thing to you need to know up front is that Amazon typically pays its marketplace sellers every two weeks, but there are ways to get paid faster. Payability is a factoring service that provide next-day payouts of sellers’ Amazon earnings. It deposits them directly into your bank account or onto a Payability credit card, and if you opt for the card, you’ll earn 2% cash back on all your purchases. Since Payability’s fee is just 2% of your Amazon sales, it’s essentially free! Click here for a no-risk trial.

What the Amazon Marketplace Offers

The Amazon marketplace is more than a place to sell goods online. As an Amazon seller, you become part of the Amazon experience that attracts a huge audience of loyal shoppers. But to benefit, you must consistently deliver on the Amazon promise. Here’s a closer look at the 2 sides of the Amazon marketplace partnership.

1. What Amazon Offers Sellers

In a word, the Amazon marketplace delivers one crucial thing: Buyers. The Amazon selling machine is designed to give customers exactly what they want, and that strategy pays off big. Shoppers come in droves, drawn by Amazon’s vast selection, competitive prices, excellent shipping, and sound reputation, to name just a few of its many sales-driving perks. The minute you become a third-party seller on the Amazon marketplace, you’re part of this Amazon shopping experience.

That’s a powerful thing for a seller, and Amazon knows it. That’s why it puts a premium on participation and holds sellers to a very high standard, all of which makes up the second part of the partnership.

2. What Amazon Sellers Must Deliver

Amazon’s customer-centric model is what keeps shoppers coming back for more, so third-party sellers must meet exacting standards to succeed on the Amazon marketplace. That includes everything from informative Amazon SEO product listings with quality images, to accurate and on-time shipping, to prompt customer service. Meeting these expectations equals higher rankings and increased sales, but a slip in any area can negatively impact on your sales.

And of course, Amazon knows the value of its ready-made selling machine and charges third-party sellers hefty fees. On average, sellers pay Amazon about 15% of every item sold. But when you consider that nearly half of the 400 million items sold on Amazon come from third-party sellers, the cost and effort are obviously worthwhile for many.

So that’s the Amazon marketplace in a nutshell. It’s much more than a simple outlet for selling products online. It’s a finely tuned system that prioritizes shoppers’ expectations, and in doing so, creates unmatched selling opportunities for individuals to mega-businesses. Next up, 2 different ways you can sell your products on the Amazon marketplace.

How to Start Selling on the Amazon Marketplace

Most businesses and individuals sell products on the Amazon marketplace as third-party sellers, but that isn’t your only option. You can also sell goods directly to Amazon as a vendor, and have Amazon sell them for you on the marketplace. Here’s a look at what these 2 methods entail, and how to get started in each.

It sounds like a lot to learn, but selling on Amazon isn’t difficult as long as you know what’s required before taking the plunge. Here are the 5 things you must understand, and do, to become a third-party seller on the Amazon marketplace.

1. Find Products to Sell on the Amazon Marketplace

Finding products that can be sold profitably is a third-party seller’s main challenge. Since anyone can sell on Amazon, new competitors crop up daily, and prices are ever-changing. Also, finding the right products to sell on Amazon is critical to success. We explore this task in detail later in this guide.

2. Create a Seller Account & Understand Your Amazon Fees

There are two types of Amazon seller accounts, Pro and Individual, and each carry their own set of fees and features. Here’s a quick look at each:

Access to advanced account management features including inventory management, bulk product uploads, and much more

✔

The Pro account offers more selling features, but you pay from day one. If you’re new to selling online, an Individual account is a no-risk way to get started. You can always upgrade to a Pro account as you grow.

Along with the account-related fees shown above, Amazon marketplace sellers are charged a referral fee for each product sold. These are category-based and range from 6% to 20% of a product’s selling price, but most sellers pay around 15%. To learn more about these account and referral fees, see our guide to Amazon seller fees.

3. List and Sell Products on the Amazon Marketplace

You can list products for sale on the Amazon marketplace two ways:

Add a sales offer to products already listed for sale on the Amazon marketplace

Craft new listings for products not yet listed on Amazon

Many sellers stick to products already sold on Amazon, but new products can be very profitable, too. It takes time to create new, high-quality product listings, but it’s worth the effort since great listings drive more sales. Learn more in our guide to writing Amazon listings that sell.

4. Manage Inventory and Fulfill and Ship Amazon Orders

Managing inventory and shipping orders are among the biggest tasks that Amazon sellers face. Volume sellers often have entire warehouse operations dedicated to shipping orders, while individual sellers might ship a few orders per week from their kitchen table.

Wherever you fall along the spectrum, you have 2 fulfillment options as a third-party seller:

Fulfillment by Amazon (FBA)— this is a popular option among Amazon sellers of all sizes. With FBA, you ship stock to Amazon, and they store your inventory and pack and ship your orders. Fulfillment by Amazon fees are exceptionally low for third-party Amazon sellers, plus you get sales-driving perks like Prime Free Shipping on your products.

5. Maintain Great Product Reviews & Seller Ratings

Shoppers always have a say on the Amazon marketplace, and that comes in the form of product reviews and seller ratings. So, it’s important to present your products as accurately as possible, ship on time, and respond to customers quickly. If you do these things right, your account will accumulate a number of high reviews and ratings. But if you slip up, you’ll see lower reviews and ratings.

Shoppers pay close attention to reviews and ratings when browsing, but that’s just part of the equation. Good ratings keep your listings high in search results and help you win the coveted Buy Box. It all leads to higher sales, so managing and maximizing each review and rating opportunity is crucial. Learn how in our guide to Amazon reviews and ratings.

Now that you’re familiar with the 5 key tasks required of third-party sellers let’s look at you other Amazon selling option: become an Amazon vendor.

Become an Amazon Vendor

If you manufacture products yourself or have goods manufactured under your private brand, you can sell these products to Amazon just as you would any other retail outlet. This is a good option for companies that want to sell their products on Amazon, but don’t want to handle the direct sales or customer service tasks themselves.

As an Amazon vendor, you sell your goods to Amazon at wholesale prices, and they handle the rest. Amazon creates the product listings, handles all sales and customer service, and stocks inventory and ships orders. All you need to do is wait for Amazon to order replenishment stock.

To become an Amazon vendor, visit the Vendor Express portal which guides you through a simple 3-step startup process:

Sign up with Vendor Express

Send a few products to Amazon for them to test market

Wait for a reorder as your products sell

Since Amazon is so big, they call the shots on your wholesale costs and payment terms. But if their terms work for your business model, becoming an Amazon vendor might be the ideal way for you to sell products on Amazon.

So, we’ve covered the 2 ways you can sell products on the Amazon marketplace: as a third-party seller or as a vendor, and how to go about each. Now it’s time to ask the big question: Is selling on the Amazon right for you and your business?

Decide if Selling on the Amazon Marketplace is Right for You

To decide if the Amazon platform is right for your business, you first must understand the process, fees, and seller responsibilities that we outlined above. Next, you need to conduct product and sales research and run the numbers. This will tell you if the products you hope to sell on Amazon will be profitable.

How you approach this depends greatly on whether you have an existing business or are just starting out. Whatever stage you’re in, you can start analyzing and testing Amazon as a potential sales channel quite easily. Here’s how.

How Existing Sellers Can Test the Amazon Marketplace

If you already sell online, in-store, or manufacture your goods, then you’re ahead of the game with a ready set of products. Here are 4 steps that will help you determine if the Amazon marketplace is the right fit for your products.

Step 1: Check out your competition on Amazon

Search for a product that you sell, or similar items, on Amazon. Do many other sellers already sell the same or competing items? If so, note the selling prices and whether competitor listings are Prime. This matters since Prime listings often take preference in Amazon search and Buy Box results. If you have competing Prime sellers, or if Amazon itself sells the same or similar item, you already have competition. Factor this into your research.

Step 2: Check out product sales rankings

Next, check out the product’s sales rankings to see if the numbers indicate a fast-selling product or a slow mover. Category-specific best-seller rankings are a good indicator of the demand for the products you sell.

Step 3: Run the Numbers

If steps 1 and 2 indicate good demand and low competition for your products, your next step is running the numbers. As an experienced seller, you already know your wholesale or production costs and your order fulfillment costs. Your competition research gives you an idea of your target selling price on Amazon. Now, run the numbers and see if you can be profitable. And don’t forget to figure your Amazon seller fees into your profit analysis.

Step 4: Create a test program on the Amazon marketplace

If everything above points to a profitable winner, you can create an Amazon seller account, list one or a few items on the Amazon marketplace, and begin a test run. This lets you test pricing strategies and measure demand for certain products, lines, or collections.

This low-risk process is the best way for sellers to understand how selling on Amazon works and test demand for products. At the most, you’ll pay $39.99 to start an Amazon Pro account, but you can even run a test program with the Amazon Individual account, which has no monthly fees.

If your test run is successful and you’re ready to expand your Amazon marketplace footprint, you’ll want to familiarize yourself with Amazon seller tools that streamline the entire process.

How New Sellers Can Test the Amazon Marketplace

If you don’t already sell products in a store or on your own website, then you first need to research products to sell on Amazon and find sources. Here are 4 ways you can go about this.

1. Retail Arbitrage

This is where you purchase discounted and clearance products in retail stores and resell them on Amazon. This a popular startup Amazon selling method and many individuals and small businesses build this into profitable side gigs or even full-time jobs. If you go this route, you’ll need to install an Amazon price scanner app for your smartphone to conduct in-store product and price research while you scour the sales.

2. Research Wholesale & Manufactured Products

Reselling products purchased from wholesale distributors or manufacturers is a primary way that retailers source products. But buying wholesale usually requires an up-front investment, since you usually have to purchase in large quantities. This can equal a big cost commitment on unproven items. Clearly, this method takes serious research but can be profitable if done right.

3. Consider Private Label Items

Private label products are items that manufacturers label with your unique brand. This is a popular sourcing option for Amazon sellers large and small, but like wholesale products, there are upfront costs involved. Check out our private label products and private label cosmetics guides to learn more about this Amazon product opportunity.

4. Sell Used Items or Handmade Goods

Many successful Amazon marketplace sellers search out finds in used books and other used product categories. Remember! Jeff Bezos, Amazon’s founder, started Amazon by selling used books online. Or, if you’re an artist or craftsperson, you can sell handmade goods in Amazon’s Handmade categories.

Once you’ve sourced one or more products and are ready to start selling on Amazon, here are your next 4 steps:

1. Open an Amazon Seller Account

You have two account options when you start selling on Amazon. You can start with the $39.99 Pro account upfront, or save the monthly fee by using the Individual account option. Be sure to familiarize yourself with Amazon seller fees before diving in.

2. List Your Products for Sale on Amazon

You can list products for sale on Amazon by adding an offer to an existing listing or by creating new listings for products that aren’t yet listed for sale on Amazon.

3. Decide on Your Fulfillment Solution

4. Test Product Pricing

It’s important to keep a close eye on your selling price compared to other marketplace sellers. You’ll also want to test different price points and try special sales promotions or free shipping offers to see what combination drive the most sales.

The Bottom Line

The Amazon marketplace connects millions of buyers and sellers each day. Its pairs highly sophisticated multi-seller ecommerce technology with a strict set of selling standards and the result is something that attracts both buyers and sellers in droves.

Millions of sellers, ranging from individuals to multi-million dollar businesses, sell their wares on Amazon, yet Amazon delivers the same buyer experience each time, no matter the seller. That’s the beauty, and the overriding goal, of the Amazon marketplace. You can find success selling an array of products on Amazon as long as you adhere to their buyer-focused standards and always remember one thing: On the Amazon marketplace, the buyer is king.

Do you sell on the Amazon marketplace? If so, please share your insights and experiences in the comments below.

About the Author

Krista Fabregas

Krista Fabregas is a staff writer at Fit Small Business and editor of the Ecommerce Section. Krista launched her first ecommerce site in 2001, and soon grew to operate two niche B2B and B2C sites, a 10K square foot warehouse, and staff of nine. Combined, her sites sold more than $1.5M annually for several years. Krista now shares her hand-on experience with others looking to expand into online sales. When not helping small business owners launch and grow efficient ecommerce operations, Krista enjoys writing fiction and nonfiction, and riding horses and motorcycles in her hometown of Houston.

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